Invest Like A Farmer is the Wall Street market blog by T. H. RAPKO AND COMPANY, LLC’s managing member Thomas H. Rapko. It presents Tom’s insights and thoughts on the markets. Although the author expresses a view on the likely future performance of certain investment instruments, each individual should carefully consider his or her investment position in relation to his or her own circumstances and with the benefit of professional advice prior to making any investment decisions.

Tuesday, July 11, 2017

Money Is Made In The Holding

What a bountiful harvest we are enjoying this year fellow farmers! I wanted to take a moment away from the fields and share with you a favorite quote of mine from my favorite book on investing.

Edwin Lefevre's masterwork "Reminiscences of a Stock Operator" has stood the test of time well and tells the story of Jesse Livermore, dubbed the "Boy Plunger," who turned his smarts, energy, and grubstake into an extremely successful career on Wall Street (up until his untimely death in the coat closet of the Sherry-Netherland.)

The primary take-away is this: "Money is made in the holding." And by that Livermore explains that the largest fortunes he made in his career were the result of buying and HOLDING the position.

Do some positions flop? Yes, many. Do some seeds fail? Yes, many. But the potential for an outsized return via an exponential winner dwarfed them all. The proverbial bumper crop that keeps a harvest going for years, generations in fact. There are many ne'er-do-wells reaping the success from seed planted generations before them. And why? They have held.

This ties in well with the Invest Like A Farmer philosophy of buying monopolistic dividend paying stocks with a steadily increasing left to right chart. Day-to-day a position may lose money. Over months it may as well, but over an increasing time period the confluence of inflation, consumption, and (hopefully) brand management those holding a position can harvest a bountiful crop.

So the is my mid-summer wisdom passed along from Jesse Livermore: "Money is made in the holding."